SHELL DEFAMATION CASE HAS PROFOUND IMPLICATIONS

In 2009, Shell Oil Co. was facing allegations of international bribery in Nigeria. It told federal prosecutors that one of its employees approved and facilitated the bribes and then lied about his role to company lawyers. In 2010, the case took an unexpected turn. The employee, senior petroleum engineer Robert Writt, sued for defamation. He claimed that the energy giant’s allegations were lies that slandered his good reputation.

By John Donovan

Shell has attracted a huge amount of unwelcome attention to its company culture of corruption as a result of making defamatory comments about a former employee, Robert Writt. Basically it ruthlessly tried to make him a scapegoat.

Mr Writt contacted my late father, Alfred Donovan, in August 2009. Many people, including former Shell employees mistreated by Shell, make contact with us.

Shell destroyed his reputation in an attempt to cover-up the truth and minimise financial consequences to Shell. A penalty imposed on Shell was cut by half, from $60 million to $30 million.

The fine was part of the settlement of Foreign Corrupt Practices Act charges with the US Department of Justice and US ­Securities and Exchange Commission following an ­investigation launched in early 2007.

Shell failed to anticipate that Mr Writt would follow in our footsteps and have the courage as an individual to sue the mighty corporation Shell for defamation. We did so twice and Shell settled on both occasions. Our libel actions stemmed from reckless statements issued and/or published by Shell. On 23 September 1998, in an unprecedented move, we were the sole topic of posters put on public display by Shell at the Shell Centre in London.

The lawyers acting for Mr Writt might want to obtain, if they do not yet have a copy, an article published by “The Lawyer” on 18 March 2011. It contains interesting comments on the case attributed to the then Chief Ethics and Compliance Officer of Royal Dutch Shell Plc, Mr Richard Wisenman.

The latest development in the Robert Writt case, published this weekend, has implications for Shell in any country were it has engaged in Corrupt practices, including Ireland. This is as a consequence of the US Foreign Corrupt Practices Act.

THE LATEST NEWS ON THE ROBERT WRITT vs SHELL LITIGATION

In 2009, Shell Oil Co. was facing allegations of international bribery in Nigeria. It told federal prosecutors that one of its employees approved and facilitated the bribes and then lied about his role to company lawyers.

The company did what dozens of others have done when facing such charges. It conducted an internal investigation, identified problems, assigned blame and begged law enforcement for mercy.

In 2010, the case took an unexpected turn. The employee, senior petroleum engineer Robert Writt, sued for defamation. He claimed that the energy giant’s allegations were lies that slandered his good reputation.

Legal experts and business groups say the defamation case could significantly affect future investigations into potential violations of the Foreign Corrupt Practices Act.

Corporations won’t cooperate with Department of Justice or Securities and Exchange Commission investigations into global corruption if they can later be sued by the individuals they name.

Businesses want the court to grant immunity from the information they provide in corruption investigations, even if the employees named claim the allegations are false.

There’s immunity for testimony given under oath but not for information voluntarily provided to federal investigators.

Six former U.S. attorneys general also filed a legal brief with the state’s highest court arguing that a ruling against Shell could impede investigations.

A decision against Shell could make Texas “a magnet for fishing-expedition suits” from employees of companies with operations in the state, said Dallas appellate lawyer James Ho, who represents major business groups in the case.

Bribery claims

In 2007, the Justice Department started investigating claims that Shell and a contractor had schemed to bribe Nigerian customs officials in a deal to drill offshore.

Shell officials volunteered to conduct an internal investigation and give the findings to authorities. Companies routinely use this maneuver to try to get charges or penalties reduced.

In a 129-page report, Shell officials said that Writt approved and facilitated the bribes, violated the company’s ethics policies and then lied about his role in interviews with Shell lawyers. The company fired Writt.

In 2010, the Justice Department hit Shell’s parent company, Royal Dutch Shell, with a $30 million penalty, about half the amount that could have been levied.

Writt, who lives in Houston, filed suit. He contends that he raised initial concerns with Shell senior managers about suspect invoices being paid to contractors working with Nigerian officials. He said he recommended that the company halt the practice.

Shell officials followed his recommendation. But Writt claims Shell superiors reversed their decision when Nigerian officials retaliated. Writt was ordered to resume the payments.

Writt was never charged.

Immunity’s risks

Shell argued in court that its report to Justice was covered by immunity as part of the government’s official investigation. A Houston trial judge agreed and rejected Writt’s case.

But the court of appeals in Houston reversed it, saying Shell issued the report voluntarily and, as a result, did not qualify for absolute privilege or immunity.

That could happen, said Macey Reasoner Stokes, a partner at Baker Botts representing Shell. But she said the risk is “greatly outweighed” by the benefits of encouraging free and full disclosure from participants in the process.

Ho, representing the U.S. Chamber of Commerce, National Association of Manufacturers and American Petroleum Institute, adds: “If left intact, the [lower court] decision may force employers to make the difficult decision not to disclose all of the details in relation to potential FCPA violations as soon as they are aware of them.”

Robert Dubose, who represents Writt in the case, said 10 states have declared all communications with law enforcement to be privileged, but Texas is not among them.

“We have to be concerned about protecting people’s reputation as well as encouraging communication,” he said.

The Texas Supreme Court is not expected to announce its decision for several months.

Royal Dutch Shell has been ordered to pay $48m (£29.4m) in civil and criminal fines over its contractor’s involvement in bribing Nigerian customs officials.

These companies, including Shell, admitted they “approved of or condoned the payment of bribes on their behalf in Nigeria and falsely recorded the bribe payments made on their behalf as legitimate business expenses in their corporate books, records and accounts”.

Shell must pay a $30million “criminal penalty” over charges it paid $2million to a sub-contractor “with the knowledge that some or all of the money” would be used to bribe Nigerian officials to allow equipment into the country without paying duty. Shell, which has not admitted guilt, must pay a further $18million to repay profits and interests.

Graft work: 6 December 2014 (THE ECONOMIST – ARTICLE DOES NOT DIRECTLY RELATE TO SHELL)

Extract

GONE are the days when multinationals could book bribes paid in far-flung countries as a tax-deductible expense. These days would-be palm-greasers have to contend with ever-tougher enforcement of old laws, such as America’s Foreign Corrupt Practices Act of 1977, and a raft of new ones in countries from Britain to Brazil.

SHELL BLOG

Comments

Dirty Rotten Scoundrels: So Shell has been caught with its pants down again, telling blatant lies, this time about the cleanliness of gas. All so that it can improve its clean credentials and make even more $$$. Can we believe anything they tell us? Where would we be without the likes of Friends of the Earth who bring Shell to task. Where does it say we are allowed to lie and mislead in our business principles? This is a great message from the leaders to the worker bees "Do as we say, not as we do". Im sure the paid Shell apologists will come on here and tell us we shouldnt pick on Shell and they are a caring company and we should be greatful for working for them and that John Donovan is to blame.

Bogus Group: A media article has revealed that Shell is already suffering from the legacy of BG Group negligence in maintaining safety critical equipment. The HSE have issued an improvement notice for failing to install gas detection equipment on the Lomond Platform, despite recommendations from two separate studies. A second improvement notice was issued for failing to test a High Integrity Protection System (HIPS) since 2014, despite the associated Performance Standard requirement to test annually. It could be assumed that Finlayson encouraged the infamous Brent TFA during his tenure at the helm of BG to maximise production volumes (an obsession with executives), at the expense of safety system testing. That assumption would not be entirely accurate, the same culture was evident in BG Group long before. Previous failures of a HIPS testing regime had been exposed at another BG operational location, yet despite this no one was held accountable. Maybe if they had been the ‘management team’ in question would not have been implanted in Aberdeen in 2012.
SEE: Shell gets two Lomond warnings from HSE

Who ya kiddin?: This Lower Forever strategy is something that has so obviously been dreamt up by HR and the bean counters so that the company can justify all the savage cost cutting and job culling. I find the company tactics revolting. Anyone with half a brain cell in the oil world knows that its only a matter of time before oil starts to motor upwards.

The second leak, a story in itself, but also what leaked, (HF) hydrogen fluoride is a very dangerous gas when it reacts with the atmosphere, also very harmful to health, look it up. Article does not say what volumes involved but the closure of this super sized plant is a big deal commercially apart from reputation issues.

Doomcaster: As much as I like some of Bill Campbell's articles this latest one is just going a bit too far. there are so many variables which will change the prognosis here that its almost impossible to predict the leakage potential of Prelude. The major ones are location and hydrocarbon profile. I wonder what Bill Campbell would advocate as a solution? It almost appears as if he wants to be in a position to say "I told you so" and not in a supportive mode of "this is what you could do". The safety cases for Prelude do of course look at spill scenarios and remediation is the key, none of us at Shell is naive enough to believe in the 100% carbon loss free situation but common sense, good engineering and good training will do a lot to combat what Bill sees as the inevitable. armchair criticism at its best.

SFA (Say F All): Reading Bill's comments has inspired me to chime in. Ruthless cost cutting is leading to such HSE incidents. The sacking of skilled and experienced staff is taking place all over the place. The risk level is being seen as acceptable where there is heavy cost injection required to be on the safe side. Nobody dares question this due to the HR assassins that are currently patrolling the corridors looking for their next victims.

'avin a larf!: You have to laugh when you read these documents which HR have produced. It must have been written by someone with verbal diarrhea. Expressions like "Focusing capability from both an organisational and locational design perspective to drive productivity, ideation and promote Agile ways of working" show just how far these people are away from the rest of us at the coal face. Some of the invented words (ideation) are superb ! I guess this is all to protect the jobs in HR as someone has to translate this BS into what happens in the real world. It appears we have regressed into the bad old days of buzzword bingo, how many buzzwords can we put into one document. Sigh.

The Fugitive: I am grateful for the information I read in the New York Times as being in the US we are far from whats happening in the American hating HQ. Such job culling decisions are made behind the scenes without just cause or any consultation and then we are told about it when all the decisions are already made. As for this being stolen property, I would love to see Shell try to take John Donovan to the courts again. I'm sure he and his attorney are licking their lips at such a (butt kicking) prospect.

REPLY BY JOHN

Sorry, no prospect of Shell suing me. I have a Shell internal communication stating that they decided long ago that any legal action against me is ruled out. Too much "internal laundry" that they do not want revealed in open court. So I have a free hand to say and publish whatever I want about Shell without fear of retribution. Always sticking to the truth, but perhaps prone to exaggeration as "Cash All Gone" suggests in the nicest possible way.

Cash All Gone: The "leaked" document is not so dramatic as you make it seem - every Shell employee can freely access it, including all the to-be org charts. Everyone should already have had a 1-on-1 conversation with their line manager on whether their job is at risk or not. So Shell is actually very transparently approaching this. On the VP musical chairs - numbers quoted are 50% of VPs would have to leave, and GM level even more. So the cull really cuts right through it...

Shell Job Cuts: How do we know that the Shell document referred to in the Reuters article is not fake? If genuine, and therefore stolen property, why would Shell allow you to publish any of the content?

REPLY BY JOHN DONOVAN

Shell was given the opportunity days ago by myself and more recently by Reuters to take issue with the authenticity of the 88 page document. I supplied extracts and offered BvB sight of the whole document in a security sanitised form. Shell had the option to ask me not to publish (I have accommodated high level requests from Shell previously when grounds were provided) or could have sought an injunction. Shell knew it was authentic and kindly provided comment for Reuters to use in their article.

Good News: PS Cadfael, why do you assume I am a man?

Good News: Cadfael, clearly you're living in the past. It sounds like you are one of those folks who expect you have a job for life. The staff numbers especially in the Head Offices have always been bloated and a legacy of high oil prices. Ben and his management team have taken what most sensible boards would have done. Look, for example, at the costs in Deepwater which have been reduced by over 50% by prudent management and getting rid of the 'good old boy' network. I agree it is not nice for people to lose their jobs, thankfully a lot of the losses have been with the older guys who ran laughing all the way to the bank leaving some of us in good positions. Yes I will look over my back but Shell isn't the only company in the world and people need to realize that protection of jobs comes at a cost. As for Ben looking "an aging, sorry, tired figure", I have never heard so much rubbish. I saw him two days ago and your statement could not be further from the truth. Sad false news I'm afraid.

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